When we think of dividend stocks, we tend to think of large, stable companies such as Automatic Data Processing (NYSE:ADP), Pepsico (NYSE:PEP), and McDonald's (NYSE:MCD). These blue chips are in the news every day and have powered portfolios for decades.

But ADP, Pepsico, and McDonald's aren't among the top five or 10 best dividend payers of the past decade (as measured by total return). In fact, the largest company in the top 10 is $9.7 billion pipeline firm Kinder Morgan Energy Partners -- and it's No. 9. The No. 1 dividend payer is a $1.9 billion office real estate investment trust (REIT) -- Corporate Office Properties Trust.

Five surprising returns
To make this list, the companies all had to be paying dividends in 1996 and this year, and they had to have a current yield greater than 1%. Without further ado, here are the top five.


Total Return

Corporate Office Properties Trust


MDC Holdings


BP Prudhoe Bay Royalty Trust


San Juan Basin Royalty Trust


Ryland (NYSE:RYL)


Data provided by Capital IQ. Performance from Oct. 19, 1996 to Oct. 19, 2006.

Only two of these companies, MDC Holdings and Corporate Office Properties Trust, currently have a market cap of more than $2 billion, although given the debt employed by Corporate Office Properties Trust and MDC Holdings, these two actually clock in with enterprise values approaching $3 billion.

As you may have already guessed, that means that all of these companies were small caps (meaning they had a market cap under $1 billion) a decade ago. But the fact that they paid dividends didn't hamper their growth -- and it rewarded investors with payouts even when the market was volatile.

Are any of these worth investing in now?
The list above has three trusts (one REIT and two royalty trusts), and since trusts have seen quite a run-up in the past five years, I'd be cautious when considering those companies for investment.

That leaves us with homebuilders Ryland and MDC Holdings. MDC Holdings, like many homebuilders, has seen its shares nearly cut in half this year. The company also trades for a price-to-earnings of 4 and a price-to-book of 1. The housing market may be in for more of a fall, but that is a combination worthy of further research -- particularly when the company sports a meaty 2% dividend yield.

The dividend wrap-up
It's not a complete surprise that the best returns among dividend payers would come from smaller companies. In fact, it's precisely what I expected, since it's easier for smaller businesses to achieve high growth rates for periods of five to 10 years.

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This article was originally published on Aug. 11, 2006. It has been updated.

At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. MDC Holdings is a Motley Fool Hidden Gems selection. The Fool has a disclosure policy.